New Trade: Long Amazon (AMZN) & Short Etsy ($ETSY)

By: ispeculatornew
Date posted: 03.03.2017 (7:35 am) | Write a Comment  (0 Comments)

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Today I am opening my 8th trade of the year in what has so far been a good year. As is always the case, you can see past 2016 (and previous years) trades here:

http://www.intelligentspeculator.net/livetrades

Let’s start off by looking at the numbers:

TickerNamePricePE RatioPE Next YearReturn YTDSales GrowthAnalyst ratingBook ValueBetaRevenue/ShareSales 5Y Avg GrowthEPS 5Y Avg Growth
ETSYEtsy Inc10.66N/A38.73-9.2533.443.672.971.883.21N/AN/A
AMZNAmazon.com Inc848.91173.3644.9713.7627.084.7440.431.21286.8920.2453.25

Revenue growth for ETSY is quickly declining to AMZN’s levels despite being much smaller:

Here are the Google trends charts:

AMZN

ETSY

credit: Google Trends

How is it that Etsy, the much smaller player in a fast growing ecommerce sector isn’t growing much faster than AMZN? To me that is a tremendous warning sign.

Long Amazon (AMZN)

A few days ago I published a lengthy post about why I think despite its difficult valuation, AMZN is a must hold. I do recognize it will have its share of volatility, especially in shorter term periods but I think it’s a guaranteed (or as close to it as you can get) long term winner, you can read the full post here

http://seekingalpha.com/article/4049918-amazon-nearly-impossible-value-yet-remains-strong-buy

Next earnings: April 27th


Short Etsy Inc (ETSY)

I just closed a trade on ETSY after very disappointing earnings for Q4. I continue to be highly skeptical of ETSY’s current valuations, I don’t think it will be able to compete with the likes of AMZN and while it targets a different customer segment in many ways, AMZN has a tremendous effect on ecommerce in general putting high standards in terms of shipping, ecommerce, etc. That is putting pressure on smaller retailers like ETSY and I don’t think it can live up to its current valuation.

 

Next earnings: May 2nd 2016

Disclaimer: Prior to opening this trade, I do not have a position on AMZN or ETSY
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